In previous studies on market transition in post-communist societies the link was missing between macro-level regional differences and individuals' incomes. This analysis, based on the Polish national sample from 2006, is aimed at casting light on regional variation in the influence of education on income levels. Building a conceptual framework based on the theory of human capital rhe authors investigate to what extent pay-offs for human capital differ across administrative districts in Poland. By incorporating contextual characteristics, they examine how micro- and macro-level factors shape labour market outcomes. Their finding provides support for the hypothesis that there is much regional variation in the returns to education, which suggests that there are better and worse places for the development of meritocratic distribution of incomes. It appears that education pays more in more economically developed regions, marked with higher rate of occupational activity. It leads to the conclusion that, on the one hand, such places create higher motivation to reward individuals according to human capital in more efficiently operating markets. On the other hand, in more developed regions there is a higher competition for wages and jobs, employers have higher demands - which encourage and enforce the rules of rewarding individuals by merits.